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Broker: Don't rule out more mortgage rule changes

A leading B.C. broker is suggesting it would fall to the government to again tighten mortgage rules in order to limit the number of at-risk Canadians taking on new housing debt, arguing the Central Bank’s hands are effectively tied.

“Essentially, we have a situation whereby the Bank of Canada would like to raise rates to slow down our borrowing habits, but to do so would mean a separate monetary policy than the States, cause the Canadian dollar to rise and potentially hinder the economic recovery as a whole,” writes Peter Kinch, owner of Dominion Lending Centres - Peter Kinch Mortgage Team, in his column for the Tri-City News. “So Carney may look to Jim Flaherty and the Finance Department again to provide the solution as they have for the past two years. Having the Finance Department make it more difficult for some Canadians to get a mortgage may be a more appropriate tool than to raise rates.”

That may be easier said than done following the minister’s announcement last week that the government would resist the urge to again tinker with mortgage rules.

“We have seen some moderation in the housing market in Canada,” Flaherty told reporters after a speech in Toronto last week. “There are a couple of hot spots in the country, including Vancouver, the condo market in Vancouver, but overall I’m satisfied that there is some moderation in the market.”

Brokers, reporting some slowing courtesy of this spring’s changes, have reacted positively to the government’s intention to maintain its course, although there is growing concern in Ottawa that those changes haven’t done enough to discourage at-risk consumers from taking on mortgage debt they may ultimately be unable to afford.

“Interest rates have nowhere to go but up,” Flaherty told reporters last week.” We are cautioning people not to assume too much long-term debt on the assumption that interest rates will stay as low as they are – because they won’t.”

Brokers and broker channel lenders have already been spreading that word of caution as they meet with clients and applications. Still, any move to further tighten mortgage rules could place undue pressure on homeowners now vulnerable to losing their homes.

“I don’t think that the new refi rules are good, at least not across the board in that the difference between accessing a LTV of 85 instead of 90 per cent may force someone who is in a tough situation through no fault of their own out of their home,” said Curtis Cannon, a sub-mortgage broker with TMG The Mortgage Group in Prince George, B.C.

It would be far wiser for Flaherty to do soemthing to rein in the run away credit card and LOC debt that prevents Canadians from investing their hard earned money in equity building home purchases. Mortgage Brokers see the effects of the Banks, and to be fair other lenders, creating useless but high profit debt for Canadians by non-stop mail outs of free credit cards and enticing ads for LOC's.

Why don't we (the government) take control of the central Bank (as it should be)and be more in control of our currency rather than allowing control to be in the hands of those that serve the banking community whose sole mandate is profit at whatever the cost.